Korea Zinc chairman's camp strengthens board control after winning audit committee seat

Korea Zinc Chairman Choi Yun-beom’s camp prevailed in the latest showdown over management control of the zinc smelter against the MBK Partners-Young Poong alliance, Wednesday, securing an audit committee seat that further strengthened its majority on the board.

The alliance said it accepted the outcome but stressed that the newly elected board members must remain genuinely independent.

“An audit committee member is not a defensive seat for protecting Choi’s control, nor is an independent director a trophy to be claimed by either side,” it said in a statement. “Regardless of who nominated them, all directors must exercise independent judgment and perform their duties in the interests of Korea Zinc and all of its shareholders.”

The election was the most closely watched item on the agenda at Wednesday’s extraordinary shareholders’ meeting. Korea Zinc needed to add a second member to its audit committee, a requirement that takes effect Thursday under the revised Commercial Act.

The company currently has one such member, Suh Dae-won, who was backed by Choi’s camp last year. Under the revised law, listed companies with assets of at least 2 trillion won ($1.5 billion) must have at least two audit committee members elected separately from the rest of the board.

Young Poong and MBK Partners, the smelter’s largest shareholders, had backed Park Yoo-kyung, a former Asia-Pacific managing director for responsible investment and governance at APG Asset Management. Choi’s side put forward Baek In-kyoo, a former chairman of Deloitte Korea’s board and head of the group’s ESG Center.

Baek won decisively, securing 5.09 million of the 6.23 million shares represented at the meeting, or 81.8 percent of the vote.

His supporters pointed to his accounting expertise in financial reporting and internal controls. Baek is a certified public accountant in both Korea and the United States, and Choi’s side said his background would strengthen the committee’s oversight role.

Wednesday’s outcome came under the Commercial Act’s new voting rule designed to limit the influence of major shareholders. Known as the “3 percent rule,” it caps the voting rights of a largest shareholder and its related parties at 3 percent.

That meant the two sides’ headline ownership stakes carried far less weight than they would have previously. The MBK-Young Poong alliance holds around 42.1 percent of Korea Zinc, while Choi’s side is estimated to control about 38.76 percent through friendly shareholders.

This left institutional investors, including the National Pension Service, major shareholders such as Hanwha Group and LG Group, as well as minority shareholders with a much greater say in the outcome.

Shareholders also elected four other independent directors at the meeting, two nominated by each side.

Choi’s nominees were Lee Hyung-kyu, professor emeritus at Hanyang University School of Law, and Seo Eun-sook, an economics professor at Sangmyung University. The alliance’s candidates were Lee Jun-bong, a professor at Sungkyunkwan University Law School, and attorney Shim Hye-seop.

Ultimately, the changes expanded the board from 14 to 19 members, with Choi’s side increasing its representation from nine seats to 12 and the MBK-Young Poong side from five to seven.

The vote was widely viewed in the industry as a show of support for Choi’s management amid the control battle, which has dragged on since 2024. Some observers also saw it as a vote for continuity as Korea Zinc pursued major investments under Choi’s leadership, including Project Crucible, its planned integrated smelter in Tennessee.

The battle for board control, however, is unlikely to end there. The terms of Suh and eight other directors expire at next March’s annual shareholders’ meeting, giving the two sides another opportunity to test their respective support among shareholders.